Gussie & Gussie

Case [2024] FedCFamC1F 59

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Gussie & Gussie [2024] FedCFamC1F 59

File number(s): CAC 1594 of 2023
Judgment of: ALTOBELLI J
Date of judgment: 15 February 2024
Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where proceedings were transferred from the Federal Court of Australia – Where the wife seeks an order pursuant to s 247A of the Corporations Act 2001 (Cth) – Where the wife seeks to rely on documents by “relaxing” the principles in Harman v Secretary of State for the Department [1983] 1 AC 280 – Where the husband seeks for the wife’s solicitor and their law firm to be restrained from representing her due to a conflict of interest – Where the husband seeks for the wife to be restrained from providing information in relation to himself or his business to her legal representatives and their law firm – Where the husband seeks to restrain the wife from disseminating information she receives in the financial disclosure process relating to him or his business – Where the husband seeks further disclosure – Where the Court orders the mother’s legal representatives to cease acting for her – Where the Court makes an order restraining the mother from disseminating information – Where the Court dismisses the s 247A application.
Legislation:

Corporations Act 2001 (Cth) ss 247A, 1337H

Family Law Act 1975 (Cth)

Federal Court of Australia Act 1976 (Cth) ss 37AF, 37AG, 37 AI

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 6.04(2)(c), Sch 1

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 r 11.4

Cases cited:

Acehill Investments Pty Ltd v Incitec Ltd [2002] SASC 344

Black v. Taylor [1993] 3 N.Z.L.R. 403

Charisteas & Charisteas (2022) FLC 94-109; [2022] FedCFamC1A 160

Durban Roodepoort Deep Ltd v Reilly [2004] WASC 269

Enares Pty Ltd v Nimble Money Ltd (2021) 158 ACSR 451; [2021] FCA 1596

Grimwade v Meagher and Others [1995] 1 VR 446

Hanks v Admiralty Resources NL (2011) 85 ACSR 101; [2011] FCA 891

Harman v Secretary of State for the Home Department [1983] 1 AC 280

Hearne v Street (2008) 235 CLR 125; [2008] HCA 36

Intercapital Holdings Ltd v MEH Ltd (1988) 13 ACLR 595

Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181

Kennon v Kennon (1997) FLC 92-757; [1997] FamCA 27

McNeill v Hearing and Balance Centre Pty Ltd [2007] NSWSC 942

Mesa Minerals Ltd v Mighty River International Ltd (2016) 241 FCR 241; [2016] FCAFC 16

Nash v Timbercorp Finance Pty Ltd (2019) 137 ACSR 189; [2019] FCA 957

Praetorin Pty Ltd v TZ Ltd (2009) 76 ACSR 236; [2009] NSWSC 1237

Rasley (Singapore) Pte Ltd v Financial & Energy Exchange Ltd [2020] FCA 1462

Division: Division 1 First Instance
Number of paragraphs: 54
Date of hearing: 19 December 2023
Place: Sydney
Counsel for the Applicant: Mr Blank
Solicitor for the Applicant: Parker Coles Curtis
Counsel for the Respondent: Mr Notley
Solicitor for…

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AGLC
Gussie & Gussie [2024] FedCFamC1F 59
Case
[2024] FedCFamC1F 59
Decision Date

CaseChat Overview and Summary

In the Federal Circuit and Family Court of Australia, Mr Gussie applied against Ms Gussie in relation to the alteration of property interests, as well as for orders regarding financial disclosure in family law proceedings. The wife had previously commenced proceedings in the Federal Court of Australia under s 247A of the Corporations Act 2001 (Cth) ("the Corporations Act"). The husband sought orders to restrain the wife’s solicitors and their law firm from representing her, on the basis that they had a conflict of interest. The husband also sought orders to restrain the wife from providing information about him or his business to her legal representatives and their law firm, as well as orders to restrain her from disseminating information she received in the financial disclosure process relating to him or his business. The husband further sought further disclosure. The wife sought an order under s 247A of the Corporations Act, which sought to “relax” the principles in Harman v Secretary of State for the Department [1983] 1 AC 280.

The Court considered whether there was a sufficient commonality of interest between the husband and wife to allow the wife’s solicitors to continue to act for her. The Court noted that the wife and her solicitors were well aware of their obligations under Harman at the time of the commencement of the Federal Court proceedings. The Court rejected the husband’s submission that there was a sufficient commonality of interest. The Court found that the husband’s interests in the proceedings competed with the wife’s interests. The Court noted that it would be contrary to public policy if a remedy under the Corporations Act was routinely invoked when less litigious and costly remedies were available under the Family Law Act 1975 (Cth). The Court found that the wife’s proceedings were an abuse of process. The Court also found that the wife’s application under s 247A of the Corporations Act was dismissed.

The Court made orders restraining the wife’s solicitors and their law firm from acting for her. The Court also made orders restraining the wife from providing information about the husband or his business to her legal representatives and their law firm, as well as orders to restrain the wife from disseminating information she received in the financial disclosure process relating to the husband or his business. The Court also made orders for the husband to provide disclosure to the wife, and dismissed the wife’s application under s 247A of the Corporations Act.

Orders

Orders of the court

CAC 1594 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR GUSSIE

Applicant

AND:

MS GUSSIE

Respondent

B PTY LTD

Interested Third Party

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

15 FEBRUARY 2024

THE COURT ORDERS THAT:

1. C Lawyers be restrained from continuing to act for the Respondent Wife (“the Wife”) in these proceedings.

2. Mr D be restrained from acting for the Wife in these proceedings.

3. The Wife be restrained from providing, or making available to view, any information in relation to B Pty Ltd or the Applicant Husband (“the Husband”) to:

(a) C Lawyers; and

(b) Any person who is employed by C Lawyers.

4. The Wife be restrained from disseminating or communicating to anyone (other than her legal representatives or an agreed mediator or expert valuer) any confidential information that she has received or will receive through the financial disclosure process as it relates to the Husband or B Pty Ltd. This includes but is not limited to copies of any Court documents, documents produced under subpoena or any documents produced by way of disclosure in relation to the family law matter between the Husband and the Wife, including but not limited to any financial documents relating to B Pty Ltd.

5. Within 14 days of the date of these orders the Wife shall file and serve an updated financial statement.

6. Within 14 days of the date of these orders the Wife shall provide to the Husband a list of all documents that she has either provided to C Lawyers (including but not limited to any employee or Director of C Lawyers), or that she has allowed anyone at C Lawyers to see, and an indication in writing of when the documents were provided, or when they were shown to anyone at C Lawyers.

7. Within 28 days of the date of these orders the parties shall exchange any outstanding disclosure documents.

8. In the event that a party notifies chambers of an intention to seek costs arising from this application within 28 days, directions will be made for such a costs application to proceed by way of written submissions.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

The Court also explains orders made for the applicant husband (“the husband”) to provide disclosure to the wife, and for the dismissal of the wife’s application under s 274A of the Corporations Act 2001 (Cth) (“the Corporations Act”).BACKGROUND The substantive proceedings in this Court between the husband and the wife were commenced on 8 September 2023. The husband’s Amended Initiating Application filed 12 December 2023, rather unhelpfully, seeks an order that the husband be granted leave to file an Amended Initiating Application, indeed a Further Amended Initiating Application, particularising the orders he seeks once full and frank disclosure and mediation have occurred. The wife’s Response to Final Orders filed on 1 November 2023, again unhelpfully, seeks the same order as the husband. It is only from the rest of the material before the Court, and the submissions made, that the Court can deduce that the substantive issue between the parties is the alteration of property interests. For example, the wife’s affidavit filed in the Federal Court of Australia (“the FCA”) in support of her application under s 247A of the Corporations Act (discussed below), suggests that there is a significant issue about the valuation of the husband’s business. Indeed, it seems that he contends that it has a low or negligible value whereas the wife contends that it has a significant value. The wife contends that the business is insolvent. What evidence is before the Court suggests that it is a business with a focus or speciality in a particular field, and carries substantial work in progress which may, may not, or may only in part be realised as billable income. The disclosure issues arising in this case seem to revolve around this valuation issue. The same affidavit of the wife also foreshadows that family violence may be an issue in the family law proceedings. The affidavit of the wife filed in support of her Originating Process under s 247A of the Corporations Act contains quite detailed evidence about the violence. It seems clear that the husband was charged and convicted arising out of an assault and that an interim apprehended domestic violence order was made protecting the wife in mid-2021. The family violence is contended, in the said affidavit, to constitute oppressive conduct. Typically, where family violence is alleged in the context of proceedings for alteration of property interests, the alleged victim of violence contends that their contribution has been rendered more arduous, and that this should be recognised by a greater adjustment in their favour: Kennon v Kennon (1997) FLC 92-757. The parties appear to have resolved parenting issues under the law of State E in the United States of America (“USA”), where the wife and their children live. The wife commenced proceedings in the Federal Court of Australia in mid-2023 against B Pty Ltd. It is important to recognise that there had been correspondence between all relevant parties, including the wife’s current lawyer, about the family law issues between the parties (see Annexure MSG10 of the wife’s affidavit filed in the FCA). Indeed, the husband commenced proceedings in Division 2 of this Court on 8 September 2023, shortly after the wife commenced her proceedings. The significance of this will be discussed below. Her Originating Process filed on that date sought orders under s 247A of the Corporations Act together with an ancillary order, and an order releasing her from her obligations arising under the Harman principle: see Harman v Secretary of State for the Home Department [1983] 1 AC 280 (“Harman”). The latter is also noteworthy. Both the wife, and her solicitors, were well aware of their Harman obligations at the time of the commencement of the FCA proceedings.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The Court rejects this submission. The alleged common interest seems only to have been framed based on the husband and the wife’s equal shareholding in the company. The Court does not accept that this interest is sufficient for present purposes. There is no commonality of interest on the present facts. The husband’s interests in the FCFCOA property proceedings compete with the wife’s interests. The example previously referred to is apposite: it is in his interest to reduce the value of the shareholding, but in her interest to increase it. Whatever common interests they may have had before separation has disappeared. Rule 6.04(2)(c) is not enlivened in the circumstances. In any event, the Court notes the inconsistency between the present application in this Court to be relieved from the Harman undertaking, and purported reliance on r 6.04(2)(c).THE THIRD ISSUE: SHOULD AN ORDER BE MADE UNDER S 247A OF THE CORPORATIONS ACT The wife seeks an order under s 247A of the Corporations Act. The relevant law is outlined at [17]–[21] of these reasons for judgment. A preliminary observation needs to be made. The granting of such an order is discretionary. This discretion will be exercised having regard to the facts and circumstances of this case. A highly relevant fact is the known contemplation or reasonable expectation of proceedings under the Family Law Act 1975 (Cth) (“the Act”), and what the Court will consider to be an adequate procedure and remedy under the Act and the Rules. It would be contrary to public policy if in cases such as the present a remedy under the Corporations Act is routinely invoked when other less litigious and costly remedies are available under the Act. The fact that the FCA transferred the proceedings to this Court is relevant. The wife and her lawyers were clearly aware of the family law issues between the parties before the commencement of proceedings in the FCA under s 247A of the Corporations Act, and the pre-action procedures referred to above were already set in motion. In those circumstances, the s 247A proceedings were, in this case, an abuse of process. This Court is conscious of the statement by Hammerschlag J in McNeill v Hearing and Balance Centre Pty Ltd [2007] NSWSC 942 at [24] that:It is also not the law, in my view, that because an applicant may have the means of obtaining information elsewhere, it is not acting in good faith, or seeking inspection otherwise than for a proper purpose. Good faith is determined not just by the availability of another means of obtaining information, but whether that other means should have been adopted in the circumstances of a particular case. In the often cited authority of State Bank of New South Wales Ltd v Stenhouse Ltd & Ors (1997) Aust Torts Reports 81–423, Giles CJ (Supreme Court of NSW Commercial Division) provides a helpful review of the authorities relating to abuse of process. In summary, a proceeding may be an abuse of process where:(1)The proceedings are unreasonably oppressive and unfair to the other party;(2)The proceedings will bring the administration of justice into disrepute; and/or (3)The party seeks to re-litigate an issue that has already been determined in previous proceedings.